ROME (Reuters) - When salvage teams begin hauling the wrecked Costa Concordia liner upright on the Italian island of Giglio next week, the financial stakes for insurers will be almost as enormous as the awe-inspiring feat of engineering.
According to reinsurer Munich Re, the overall insurance loss from the accident could surpass $1.1 billion. As much as half of that may be swallowed up by the cost of the salvage operation.
"I think now it's the most expensive wreck removal operation in history," said Rahul Khanna, a former tanker and bulk carrier captain and now a senior marine risk consultant with the shipping insurance arm of Allianz.
"We have our fingers crossed on it and we just hope that this is a success because if it is not, I don't even want to think what the financial consequences would be," he said.
The cost of the salvage operation, which a senior official from the ship's owner Costa Cruises this week estimated at 600 million euros ($800 million) "and rising", is already expected to be greater than the value of the vessel itself.
That compared with other complex salvage operations like the MV Rena, a huge container ship which sank in New Zealand in 2011, whose salvage costs are estimated at around $240 million.
The sheer scale of the Costa Concordia, a vast floating hotel which was carrying more than 4,000 passengers and crew when it went down, make the recovery one of the most complex ever attempted.
Lying on its side on a rock shelf just outside the harbor mouth, the 114,500 tonne vessel is the length of three soccer pitches and appears almost as big as the tiny Tuscan port where it was holed and sunk with the loss of 32 lives on January 13 last year.
A multinational team of 500 salvage engineers has occupied the island for most of the past year, stabilizing the hulk and preparing for the start of the lifting work, which is expected to begin at 6 a.m. (0400 GMT) on Monday.
If all goes as planned and the weather remains fine, a so-called "parbuckling" operation will see the ship rotated by a series of cables and hydraulic machines, pulling the hulk from above and below and slowly twisting it upright.
Engineers say they are confident the 12-hour parbuckling project will work but there is no 100 percent guarantee that nothing will go wrong.
"The size of the ship and her location make this the most challenging operation I've ever been involved in," said Nick Sloane, a South African with three decades of experience who is leading the project for contractors Titan Salvage.
Once the ship is upright, it will be stabilized before being eventually towed away to be broken up for scrap. Alternative approaches, such as breaking the ship up on the spot, were rejected as too complicated.
By coincidence, the salvage operation will take place on the same day as the annual conference of the International Union of Marine Insurance in London.
"And as you can imagine, there'll only be one subject of conversation," said one industry executive.
Cruise ships have traditionally been among the safest big vessels but the insurance industry has faced a growing challenge from a new breed of superships like the Costa Concordia and the monstrous new bulk cargo carriers that have emerged with the rise in global trade volumes.
Around two-and-a-half times the size of the Titanic, the Costa Concordia was typical of the latest generation of cruise liners, built to carry thousands of passengers and keep them entertained with restaurants, cinemas and bars.
Similar developments have been seen with the bulk cargo carriers, the largest of which can carry up to 18,000 20-foot-long containers.
"These are massive ships now and if something goes wrong we have some serious challenges, especially where they're pushing the boundaries of design," Khanna said.
Insurance underwriters have grappled with the new risk profile presented by the massive new ships and considerable attention has been focused on the cost of recovery and repairing environmental damage in case of any accident.
"If such a vessel were to get into trouble or run aground in a remote location, it might take up to two years just to remove the containers," he said. "These are the kind of things which worry the industry."
As the salvage teams in Giglio start their preparations, the experience gained in shifting the Costa Concordia should provide some guide as to how feasible other difficult wreck recoveries may prove in the future.
"This whole operation is very new so everybody is very keen to look at how it is done and hopefully it will be successful," Khanna said.
($1 = 0.7514 euros)
(The story corrects size relative to Titanic)
Additional reporting by Eleanor Biles; Editing by Giles Elgood